North America's electricity grid is being confronted with significant "critical reliability challenges," driven by soaring power demands attributed to the rapid expansion of artificial intelligence technologies. The North American Electric Reliability Corporation (NERC) has sounded this warning, highlighting an imbalance between electricity consumption growth and power generation capabilities due to the ongoing closure of coal-fired plants.
The urgency of the situation has been detailed in NERC's latest assessment, the 2024 Long Term Reliability Assessment report, which notes that the surge in electricity demand is outpacing the speed of necessary infrastructure enhancements. Specifically, NERC identified that the current energy landscape in the US and Canada faces mounting resource inadequacies over the next decade as thermal generators announce their retirement plans. “Most of the North American [bulk power system] faces mounting resource adequacy challenges over the next 10 years as surging demand growth continues and thermal generators announce plans for retirement,” the report stated.
Research anticipates a substantial increase in peak electricity demands, predicting a rise of 132 gigawatts, or 15 per cent, during the summer months over the coming decade. This projection marks a considerable upward revision from last year’s estimate, which anticipated an increase of only 80 gigawatts. Similarly, peak winter demand is expected to surge by 149 gigawatts, or 18 per cent, in comparison to the previous forecast of 92 gigawatts. NERC warns that some regions in the United States may encounter power shortfalls in as little as one year.
NERC attributes the accelerating electricity consumption to the rapid proliferation of data centres necessary for powering AI and cryptocurrency mining operations, alongside the rising adoption of electric vehicles and heat pumps among consumers. Furthermore, projections from the International Energy Agency suggest that global power consumption from data centres alone could hit 1,000 terawatt hours by 2026—effectively doubling the figures seen in 2022 and matching the total electricity requirements of Germany.
The challenges posed by this unprecedented demand are compounded by the fact that fossil fuel generation is entering a phase of decline, with 115 gigawatts of generation capacity scheduled for shutdown within the next decade. Consequently, NERC cautions that the supply buffer could dip below the required levels in many jurisdictions by the end of the decade, particularly impacting the Midcontinent System Operator's grid which serves the US Midwest, likely facing shortfalls as soon as next year.
In the face of these trends, major technology firms are actively seeking solutions to meet the anticipated spikes in energy requirements, with various partnerships leading to a noticeable increase in nuclear energy generation as a response to the evolving demands of the digital economy.
Source: Noah Wire Services